What is considered a deceptive loan practice?

I recently was approved for a home equity line of credit. When we were approved they said the loan will take 7-10 days. Unfortunately, we did not receive the loan in that time frame. We started making changes and getting things in order to receive the loan. By not getting the loan in the time frame they told us we had to put things on credit. Which made are debt to income ratio higher. The credit union took so long with the paperwork for the loan that they had to pull our credit again. Which ended up being a 4 difference from when we began. The credit union said we may not be able to receive the loan because of our debt to income ratio. Would this be considered deceptive practices? We received an email a couple weeks after starting the process saying we are approved for a home equity line of credit with a limit of $62,505. We have thought since they said we are approved that we were getting the loan.

Asked on August 22, 2018 under General Practice, Utah

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

It is not a deceptive practice; there is no guaranty of when you will get a loan, or even of getting it at all--those preapprovals you get in the mail are NOT gurantees of a loan, since no loan is guaranteed until after it goes through underwriting and the bank/lender actually guarantees it. While you may not have understood that, it was not deceptive; it's simply the case that no loan is ever guaranteed until you in fact have it, and lenders may take time to process it, or even decide to not loan to someone who received a mail preapproval.
Further, if you were not able to get the loan becuse you started putting things on credit, altering your debt-to-income ratio, that is not anything the lender is responsible for: it is something you voluntarily did. You did not have to borrow money while seeking loan approval (and in fact, it is strongly recommended that you don't).
Basically, you received nothing more in the mail than offer to apply for a loan, which you did. Nothing was committed to or guaranteed, and there was no deception, at least from a legal point of view.


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